Macedonia – Berlin Policy Journal – Blog

Postcard from the New Silk Road: A Highway to Nowhere

Jacob Mardell — Thu, 27 Jun 2019 10:23:34 +0000

Eating hot pot in the North Macedonian mountains, a group of Sinohydro workers is roughing it. They are waiting to restart work on the Kicevo-Ohrid highway. For how long is anybody’s guess.

Chinese New Year banners are not common in rural Macedonia, but there, fluttering against the doorframe of a dilapidated breezeblock house, are the Chinese characters for “New Year, New―.” The last character is cut off.

Like the construction site I’ve just come from, the building looks abandoned. Chickens scratch the ground in lonely silence and aluminium dumpsters overflow with plastic detritus and discarded clothes. But this building isn’t empty―hanging on a washing line I spot a pair of still-damp overalls, and from somewhere deep in the concrete interior, I hear a cough.

Mr. Li is from Chengdu. He’s been living in this building, along with 40 other Sinohydro workers, for over two years. They’re working on the Kicevo-Ohrid highway project, one of two big highways being built and financed by China in North Macedonia. The other highway, Miladinovci to Stip, has recently opened to traffic, but the Kicevo-Ohrid project feels thoroughly forgotten. As he stirs a simmering pot of chicken legs and Sichuan peppers, Li tells me that he and his colleagues have been “off-work” for months.

The project is a hodgepodge of near-completed and under-construction works. Some sections are only missing a top layer of tarmac, while others are mostly gravel and half-poured concrete. The highway’s original price tag was €374 million but prices have since increased―though it’s difficult to say by exactly how much.

No one really knows what’s going on with the Kicevo-Ohrid highway. In 2015, a series of salacious audio recordings released by then opposition leader Zoran Zaev precipitated years of political crisis. In one of these wiretapped conversations, the former transport minister and prime minister can be heard discussing how best to extort €25 million from Sinohydro. Both highways have also been plagued by ambiguous “technical difficulties,” resulting in delays, price increases, and reopened negotiations.

Zaev is now in power (the former prime minister, Nikola Gruevski, is in hiding in Hungary) and his government has signed a third annex on the highway. On paper, the highway is under construction. In reality, it is in limbo, and, somewhere in the mountains of Macedonia, a lost tribe of Sinohydro workers is waiting patiently.

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A Road that Divides as Much as It Connects

Jacob Mardell — Thu, 27 Jun 2019 08:08:10 +0000

The Bar-Boljare highway in Montenegro is being built by a Chinese company and financed with Chinese debt. The project is welcomed by some, but for many here its costs are too high.

After four years as an engineer on site, Mladen has grown accustomed to the sight of mountain-defying infrastructure. I’m far less jaded; to my eyes, Moračica Bridge is clear proof that humankind—or more specifically, China Road and Bridge Corporation (CRBC)—has mastered the ability to conquer geography. Rising 200 meters above the Morača riverbed, this kilometer-long bridge is the apex of an ambitious new highway running from Smokovac, near Montenegro’s capital of Podgorica, to Matesevo in the North.

The current route North is a twisting two-lane road chiseled into the mountainside. The new 41-kilometer stretch of highway shoots right through Montenegro’s craggy scenery, its 20 bridges and 16 tunnels shortening a 180-kilometer nail-biting journey into a carefree 30-minute drive. But this impressive piece of civil engineering doesn’t come cheap, and critics of the highway claim that their small country can ill afford such a glitzy project.

The Exim Bank of China is providing 85 percent of the cash for the government’s €810 million contract with CRBC, but, taking into account currency fluctuations, interest, and additional works, Montenegro will probably end up owing China closer to €1 billion. For a country with fewer people than Frankfurt and a gross domestic product on par with the Bavarian town of Bamberg, €1 billion is enormous – roughly equivalent to €1,600 from every man, woman, and child in Montenegro.

Hugely Polarized Debate

The Smokovac-Matesevo highway is just one part of a 170-kilometer tarmac artery that the government hopes will run from the Adriatic port of Bar to Boljare, on Montenegro’s Northern border with Serbia. Provisions for the remaining four sections have not yet been arranged, but the government estimates they’ll cost another €1.7 billion.

Bridges are designed to connect people, but massive infrastructure projects like the Bar-Boljare highway often end up dividing them instead. In Montenegro, the debate around the highway is hugely polarized. Montenegro’s businessman-cum-president, Milo Djukanovic, and his Democratic Party of Socialists (DPS), have been in power for 30 years. And here if you are pro-government that means being pro-highway.

Meanwhile, watchdogs and the opposition press are uniformly critical of the project. They see it as a spectacular manifestation of government incompetence, corruption, environmental harm, criminal opacity, and resource misallocation. Debate is lively and people are relatively happy to express their opinions. The press is not stifled here, as it is in the Serbia of unpopular strongman Alexander Vucic. As one long-time watcher of Balkan politics explains, “Djukanovic doesn’t share Vucic’s obsession with being loved—he only wants to remain in power and make money.”

Kickbacks Are the Norm

There is no hard evidence of corruption in this project, but everyone here admits that corruption is endemic throughout the Western Balkans. Kickbacks vary, but in Montenegro I’m told that 10 percent of contract value is not an outrageous sum to request as a bribe. Even many CRBC employees, who speak only on the condition of anonymity, assume high-level corruption exists in the project. When I raise the issue with one worker, he gives me a pitying smile and says, “taxes and corruption are omnipresent—any construction project involves envelopes changing hands.” Even a senior manager tells me, “of course there is corruption,” afterwards assuring me that it is nonetheless “within an acceptable range.”

Under the terms of the contract with CRBC, at least 30 percent of work must go to local contractors. There are no public tenders involved in the awarding of these subcontracts, and it is highly unlikely that decision makers would miss out on such a juicy opportunity to reinforce their patronage networks.

This isn’t corruption imported from China—it is thoroughly local, and it’s worth noting that the Chinese aren’t the only ones facilitating corruption. While projects involving the big international financial institutions are probably clean, interlocutors say Western companies are often involved in shady deals. In Niksic, Montenegro’s second largest town, I meet Nenad Markovic, an old school trade union leader who seems calmly resigned to his role of intractable, hopeless opposition to the powers that be. I ask him what’s driving the project. Pausing over his coffee, he answers conclusively, “I don’t see any motivation other than getting rich.”

Of course, corruption thrives in darkness, and according to MANS, a local partner of Transparency International that has energetically campaigned against the highway, the project is veiled in secrecy. The government has declared numerous project-related data, acts, and documents as state secrets, and recent changes to the Freedom of Information Act have led to a widening of the transparency deficit in Montenegro.

The lack of public information on inspection reports is particularly worrying. The Tara river basin is a UNESCO World Heritage Site universally revered by Montenegrins, but its riverbanks are currently being used as dumping sites for excavated material, and construction is said to have affected the course of the river. Critics say the damage has been done, but the government says strict rules are enforced and that there’s a well thought out cleanup plan. One sign I spot along the river warns that violators of environmental rules will be prosecuted—the sentence is unpunctuated in the local language but carries three exclamation marks in Chinese.

The engineers I meet seem sincere in their claims that CRBC are kept under strict supervision, but again transparency is the issue—without letting NGOs and media in on the supervision process, these claims simply can’t be verified.

Relative Transparency

In fairness to the government, opposition complaints should be taken with a pinch of salt. While certain clauses of the loan agreement, for instance, are widely said to be unpublished, the Ministry of Transport happily shared the full document. It includes supposedly “secret” clauses like Article 8.1, which waives Montenegro’s sovereign property rights (apart from to military and diplomatic assets) in case of loan default, and Article 8.5, which stipulates arbitration in Beijing. In general, compared to many Belt and Road projects around the world, documentation on the Bar-Boljare highway is readily available.

Corrupt or not, transparent or not, the fundamental issue here and the crux of most disputes over infrastructure remains the question, “is this project in the national interest—is it worth it?”

From a short to mid-term commercial perspective, it’s difficult to see how the highway will pay for itself. Even the project’s supporters have largely abandoned this claim. Instead, they point to less calculable benefits. The government’s main argument is that the highway will help revitalize the impoverished North. And so, while many Podgorica residents are quick to criticize the highway, Montenegrins from the North are largely positive. I ask one young student waiting at a bus station, “Do you think the highway is worth the money?” He laughs and says, “Well, I am from the North, so yes—it is very good for us.”

The Ministry of Transport mentions “balanced development” of North and South, but they also give me 14 other justifications, from “reducing traffic pollution” to “developing tourism.” They press home one point in particular: “I think we can all agree that the value of human life is immeasurable.” Locals joke that only tourists are intimidated by the current route, but a worrying number of people do die on this stretch of road. Many people I talk to use this emotive justification: is a billion too much to pay for even one Montenegrin life?

Nobody denies that the new road will be safer, or that it will make the lives of Serbian tourists and Northerners easier—they just think that 25 percent of GDP is a high price to pay for 41 kilometers of road. One interlocutor likens the highway to a Ferrari, or a Gucci bag—great to have, but probably a misallocation of resources if you earn €300 a month, as many Montenegrins do. Fundamentally, the question of worth is a subjective one. Whether they want to make money and win votes (the highway will be completed this year, a month ahead of elections), or because they truly believe Montenegro needs one, the government is determined to own a Ferrari.

Chinese Muscle and Chinese Debt

The idea of building a North-South highway has been knocking around for decades. Over the past 10 years, there have been a couple of false starts, and the project was turned down by the European Bank for Reconstruction and Development (EBRD). A number of feasibility studies paint the highway as an overly adventurous and commercially questionable undertaking, and several more modest ideas have been floated as alternatives. But the government has held out for a highway. And only the Chinese have been able to make this dream a reality.

Over an espresso in a downtown bar, the senior CRBC manager tells me emphatically, “no one apart from the Chinese could have built this highway.” He’s right—Chinese banks are lending where the EBRD and World Bank dare not tread, providing capital for unbuilt national projects across the world. The only condition is that Chinese companies get a slice of the action—this is the quintessential one-two punch of the Belt and Road package: Chinese engineering muscle fueled by Chinese debt.

For many in the Western Balkans, this paradigm is liberating. Beijing provides a source of finance free from the meddling demands and conditions that characterize finance issued by institutions like the EBRD. For those that support the project, Chinese credit is helping usher countries along the path of development. The senior manager tells me, “every day I am more and more convinced this highway is the best thing that could have happened to Montenegro.” Critics of the highway are less enthusiastic—they say Chinese credit facilitates corruption, waste, and vanity. One interlocutor—an expert on the highway who wishes to remain anonymous—reflects philosophically, “this loan has allowed us to explore our worst political instincts.”

Dispatch from Istanbul, Turkey

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What’s In a Name?

Nikolia Apostolou — Wed, 20 Jun 2018 10:42:45 +0000

Recent agreement in a long-running naming dispute between Greece and Macedonia has been hailed as a breakthrough. But nomenclature aside, not all is well in the Balkans—and Brussels must act soon.

The 28-year long row between Macedonia and Greece appears to be over. The international community can finally put the five-letter acronym FYROM (the Former Yugoslav Republic of Macedonia) aside and embrace its new moniker.

In a deal reached last Sunday, Macedonia will rename itself the Republic of North Macedonia. The Greek and Macedonian foreign ministers met at Lake Prespa which straddles their common border to sign the agreement, joined by UN mediator Matthew Nimetz and EU foreign policy chief Federica Mogherini.

The two countries’ young prime ministers, Alexis Tsipras and Zoran Zaev, were also on hand to celebrate the historic rapprochement. In front of the cameras, they spoke of peace, stability, and, of course, music. There were even shows of friendship—Tsipras and Zaev exchanged three kisses, as is tradition in the Balkans region, and Zaev removed his tie to hand it over as a present for the always-tieless Tsipras.

And the agreement was indeed historic. For decades now, political careers in Greece have been built on the mantra that all things Macedonian are Greek. Now, Athens will recognize its neighbor as North Macedonia. Macedonia, meanwhile, will be able to call its language and its citizens Macedonian, but it will cease to make claims on Hellenic history or the ancient Greek King of Macedonia Alexander the Great. In return, Athens has agreed to stop vetoing Macedonia’s EU and NATO membership. In the Balkans—Europe’s traditional powder keg—that’s a lot of compromising.

At home in their respective countries, however, the deal sparked outrage among nationalists; they protested outside both parliaments, chanting: “Down with the traitors. You’re selling our country. Macedonia is ours.” And both governments know the issue is not well and truly resolved. First, they’ll have to convince the people of their countries that the deal is mutually beneficial. Then they have to submit the agreement to their parliaments for ratification.

The FYROM needs to change its name by the end of 2018 and expunge any territorial claims on the northern Greek province of Macedonia from its constitution. After that, it will need to notify all countries as well as international organizations and institutions that its name has been changed to the Republic of North Macedonia.

Within a month from the signing, a joint committee of experts on historic, archaeological, and educational matters must also decide whether school textbooks, maps, historical atlases, and teaching guides in both countries need revising. Another committee will meet to agree on trademarks and commercial names.

Seeking EU Membership

Macedonia will seek admission to NATO and the EU as soon as the agreement comes into effect, and Tsipras will notify the President of the European Council that he supports the opening of accession negotiations. The Greek prime minister hopes his support will boost his negotiating power during upcoming talks on Greece exiting the EU’s bailout program.

After all this, the ball is firmly in the EU’s court. Enlargement has virtual been on hold for more than a decade now, with Croatia being the last country to join in 2013. Even though the latest Commission Staff Working Document on Macedonia’s accession process, published in April, says that Zaev’s government is advancing the EU reform agenda, the absence of a concrete accession date has emboldened nationalists and euroskeptics in the country.

Ethnic passions still run high. Just last year, Zaev, who was then the leader of the opposition, was beaten up by protestors for electing an ethnic Albanian as parliament speaker. In 2001, ethnic violence broke out between the Albanian minority and security forces, spilling into an armed conflict and leading to the death of a thousand people. The violence only ended after the United Nations became involved.

For the EU, moving forward with accession might be the only way to stop Russia’s and Turkey’s expanding influence in the Balkans. But that would then be more of a political decision rather than a genuine consideration of whether the countries in question meet the EU accession criteria.

Perpetual talks with little progress have led to disengagement in the Balkans. It wouldn’t be a surprise to see some parts of former Yugoslavia falling into another world power’s lap. Both Moscow and Ankara—not to mention Beijing—have gained significant footholds in the region while, in the meantime, Brussels has been dragging its feet.

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The Cloak of Instability

Zlatko Hadžidedić — Mon, 22 May 2017 08:17:32 +0000

Rising political tensions in Bosnia-Herzegovina and Macedonia are sparking concerns in Europe and the United States, and rumors are mounting that the region is on the brink of war once again. What is really going on?

At first sight it looks like business as usual in Bosnia. True, ethnonationalist parties there have sharpened their rhetoric and threatened to paralyze state institutions – but they have been doing so for years. In Macedonia, on the other hand, we are witnessing a rather unusual development: in images broadcast around the world, an angry mob of VMRO supporters, a Macedonian nationalist party, stormed parliament to block a coalition between the Social Democratic Party and Albanian ethnic minority parties. The Albanian parties’ MPs were attacked and beaten, but they reacted to the provocation in a conciliatory manner, preventing an ethnic conflict. Still, the EU and NATO urged calm as the international community raised alarm bells.

These tensions have sparked serious concerns in the West, although – paradoxically – they have actually been triggered by initiatives coming from the West itself. Tensions in Bosnia-Herzegovina and Macedonia flared after op-ed articles appeared in Foreign Affairs and the New York Observer, written by former British diplomat Timothy Less and John R. Schindler, previously of the US National Security Agency (NSA), respectively. This development can hardly be cast off as coincidental, particularly given the fact that Balkan leaders are easily played one against another when they detect that the West is considering a geopolitical reshuffle in the region. Since they are already well accustomed to escalating inter- and intra-state tensions for their own political gain, Balkan leaders can readily assemble such tensions as soon as they see signs in the US media – supported, of course, by the authority of “experts.”

These two articles advocate a total redesign of the existing state boundaries in the Balkans: A Greater Serbia would appropriate the existing Serb entity in Bosnia-Herzegovina and the internationally-recognized Republic of Montenegro; Greater Croatia would usurp a future Croatian entity in Bosnia-Herzegovina; Greater Albania, meanwhile, should envelop both Kosovo and the western part of Macedonia. All these territorial redesigns would end the chaos in Bosnia and Macedonia and bring about lasting peace and stability in the region.

Of course, it is easy to claim that this approach has nothing to do with the policies of the authors’ former employers. However, certain circles within the foreign policy establishment in both the United Kingdom and the United States have repeatedly advocated the very same ideas – i.e. partition of multiethnic states and creation of monoethnic greater states – as a path toward lasting stability in the Balkans, with Bosnia and Macedonia’s disappearance as collateral damage. These narratives have been circulating in the back halls of London and Washington for decades.

They would argue that the creation of monoethnic states contributes to the region’s stability, but this claim has always served as a pretext for implementing what many in these circles consider a fundamental geopolitical doctrine – the so-called Heartland Theory by Sir Halford J. Mackinder (1861-1947). The British academic and politician, seen as one of the founding fathers of geopolitics, famously proclaimed: “Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island commands the world.”

Mackinder’s doctrine argues for the long-term destabilization of the territorial belt between Germany and Russia (consisting of Eastern Europe and the Balkans) as its primary geopolitical goal, in order to prevent these two continental powers from establishing a direct territorial link, which would enable them to gain control over the entire Heartland, and thus over the entire world.

Beware of Redrawing Maps

Ostensibly, these narratives are rooted in what is considered a plausible presupposition: as long as greater state projects remain unrealized, nationalist tensions will continue to act as a destabilizing force. Yet history has clearly demonstrated that this theory is a simple fallacy. The concept of ethnonational states has always led to deep instability wherever applied. Such territories cannot be created without extreme coercion and violence over populations that do not “belong” – including ethnic cleansing and genocide. Solving national issues by creating ethnically cleansed greater states is a strategy that spawns permanent instability.

What’s more, such a scenario would be politically unacceptable, unless presented as an alternative to a full-scale war. But no state in the Balkans has the capacities or resources – military, financial, or demographic – to wage such a war, and their leaders are too aware of this to even try. Therefore, the only remaining option is to create an atmosphere that simulates the immediate threat of war by stoking nationalist sentiments between and within Balkan states. Of course, these tensions have already been present since 1990, but now they are evolving into a festering chaos, creating the illusion of an imminent armed conflict.

In this simulated atmosphere of “inevitable war,” a radical geopolitical reconfiguration of the entire Balkans can quickly become politically acceptable if it is seen as the only peaceful solution. All that is left is to offer to implement this reconfiguration at an international peace conference, like the one held in Dayton, Ohio, in 1995.

It comes, therefore, as no surprise that a conference on the Western Balkans has been scheduled for 2018 in London. The specter of renewed conflict in the region may grant a geopolitical redesign the legitimacy and urgency needed to be implemented at this conference.

Of course, such a redesign will only lead to further resentment and volatility in the Balkans and Eastern Europe and trigger more instability across the continent. It is in the EU’s best interest to prevent the continent’s destabilization, and Brussels has no choice but to clearly reject such greater state projects and assume responsibility – both political and legal – for protecting the sovereignty and territorial integrity of all Balkan and Eastern European states, from Bosnia and Macedonia to Ukraine, Georgia, and the Baltic states.

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